Inflation bank interest riba.

Mu' meneen Brothers and Sisters,

As Salaam Aleikum wa Rahmatullahi wa Barakatuh. (May Allah's Peace, Mercy and Blessings be upon all of you)


One of our brothers/sisters has asked this question:

As salaamu alaikkum wa Rahmathullah, My query is regarding interest from banks. Once i was telling my friend that it is not right to take interest from the deposits in banks. But he countered it by saying that because of inflation, it is justified. He said that during the olden days the value of money remained the same. That is 10 Riyal is always having value of 10 Riyals even after 10 years. but now it is not the same. And thus he is justifying accepting the interest. So i want to know if his explanation is correct? Please help.


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Inflation bank interest riba

In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is none worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.


First and foremost, to assume that the concept of ‘inflation’ is a new concept and was not present in the ‘olden’ days is an absolutely incorrect statement….for the economic reality of ‘inflation’ is a derivative of the timeless notion of supply and demand of goods and/or services and/or the mode of exchange (money).  To claim that the concept of ‘inflation’ was not present at the time of the Revelation of the Quran is to base one’s assumptions on an absolutely false hypothesis! 


Secondly, the fixed rate of return as interest one receives by simply placing the funds in an interest-bearing account in a conventional bank puts the full risk on the shoulders of the person who borrows the funds from the bank on interest.  Regardless of whether the person who borrows the money from the bank makes a profit or a loss, the account holder is liable to receive a fixed rate of return……Islam guides that such a transaction is absolutely unfair and unjust and puts the well-being of the borrower at severe risk, while the other party simply sits and ‘sucks the blood’ of the borrower!  Under any and all circumstances, the guidance of Islam has categorically declared unlawful all forms and manifestations of injustice.


Thus the forbiddance of ‘riba’ or usury/interest has absolutely nothing to do with the concept of inflation…but rather it is related to the concepts of justice, fairness, and well-being of all concerned.


Allah says in the Holy Quran Chapter 2 Surah Baqarah verse 274-276:

But those who devour ‘riba’ become like the one whom Shaitaan has bewitched and maddened by his touch.   They have been condemned to this condition because they say,  “Trade is just like ‘riba”,  whereas Allah has made trade halaal and ‘riba’ haraam.   Henceforth,  if one abstains from taking ‘riba’ after receiving this admonition from his Lord,  no legal action shall be taken against him regarding the ‘riba’ he had devoured before:  his case shall ultimately go to Allah.   But if one repeats the same crime even after this,  he shall go to Hell,  where he shall abide for ever!   Allah deprives ‘riba’ of all blessing and develops charity, and Allah does not like an ungrateful,  sinful person.


Allah says further in the Holy Quran Chapter 2 Surah Baqarah verse 278:

O Believers!,  fear Allah and give up that ‘riba’ which is still due to you,  if you are true believers.   But if you do not do so,  then you are warned of the declaration of war against you by Allah and His Messenger!


Allah says in the Holy Quran Chapter 4 Surah Nisa verse 161:

That they took ‘riba’,  although they were forbidden.  And that they devoured men’s substance wrongfully.   We have prepared for those among them who reject faith a grievous punishment (of Hell Fire)!


Allah Says in the Holy Quran Chapter 3 Surah Ale-Imraan verses 130-132:

130    O ye who believe! Devour not ‘riba’ doubled and multiplied; but fear Allah; that ye may (really) prosper.

131    Fear the Fire which is prepared for those who reject faith.

132    And obey Allah and the Messenger; that ye may obtain mercy.


Al-Tirmidhi Hadith 2829        Narrated by Ali ibn AbuTalib

Ali said he heard Allah's Messenger (saws) invoke the curse of Allah on those who took usury, those who paid it, those who recorded it, and those who refused to give sadaqah.


Dear and beloved brother in Islam, Allah and His Messenger (saws) have declared every aspect and every manifestation of the abomination of ‘riba’ as absolutely forbidden and unlawful for the believers who sincerely fear Allah and the Last Day; thus let no one in creation convince you otherwise!!!


If one trusts, obeys, and follows the guidance and commands of Allah and His Messenger (saws),   one can be assured of never ever being misled;   but if one believes, obeys and follows any other guidance, other than that of Allah and His Messenger (saws), one can be assured of being led astray.  


Whatever written of Truth and benefit is only due to Allah’s Assistance and Guidance, and whatever of error is of me alone.  Allah Alone Knows Best and He is the Only Source of Strength.


Your brother and well wisher in Islam,





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